Sri Lanka announces more hikes in fuel prices as US delegation arrives

Sri Lanka hiked fuel prices on Sunday, creating further pain for ordinary people as officials from the United States arrived for talks aimed at alleviating the island’s dire economic crisis.

Ceylon Petroleum Corporation (CPC) said it raised the price of diesel, used widely in public transport, by 15 percent to 460 rupees ($1.27) a litre while upping petrol 22 percent to 550 rupees ($1.52).

The announcement came a day after Energy Minister Kanchana Wijesekera said there would be an indefinite delay in getting new shipments of oil.

Wijesekera said oil due last week had not turned up while shipments scheduled to arrive next week would also not reach Sri Lanka due to “banking” reasons.

Wijesekera apologised to motorists and urged them not to join long queues outside pumping stations. Many have left their vehicles in queues hoping to top up when supplies are restored.

Official sources said the island’s remaining fuel supply was sufficient for about two days, but that authorities were saving it for essential services.

A delegation from the US Treasury and the State Department arrived for talks to “explore the most effective ways for the US to support Sri Lankans in need”, the US embassy in Colombo said.

“As Sri Lankans endure some of the greatest economic challenges in their history, our efforts to support economic growth and strengthen democratic institutions have never been more critical,” US ambassador Julie Chung said in a statement.

The embassy said it had committed $158.75 million in new financing in the past two weeks to help Sri Lankans.

The UN has already issued an emergency appeal to raise $47 million to feed the most vulnerable segments of the island’s 22 million people.

About 1.7 million residents need “life-saving assistance”, according to the UN, with four out of five people reducing their food intake due to severe shortages and galloping prices.

Last week, the government closed non-essential state institutions and schools for two weeks to reduce commuting because of the energy crisis.

Several hospitals across the country reported a sharp drop in the attendance of medical staff due to the fuel shortage.

Prime Minister Ranil Wickremesinghe warned parliament on Wednesday that more hardships were on the way.

“Our economy has faced a complete collapse,” Wickremesinghe said. “We are now facing a far more serious situation beyond the mere shortages of fuel, gas, electricity and food.”

Unable to repay its $51 billion foreign debt, the government declared it was defaulting in April and is negotiating with the International Monetary Fund for a possible bailout.

Cash-strapped Sri Lanka on Sunday announced sending ministers to Russia and Qatar to try and secure cheap oil a day after the government said it had all but run out of fuel.

The government meanwhile extended a two-week closure of non-essential state institutions until further notice in order to save fuel, maintaining only a skeleton staff to provide minimum services.

Energy Minister Kanchana Wijesekera said two ministers will travel to Russia on Monday to discuss getting more oil following last month’s purchase of 90,000 tonnes of Siberian crude.

That shipment was arranged through Coral Energy, a Dubai-based intermediary, but politicians have been urging the authorities to negotiate directly with President Vladimir Putin’s government.

“Two ministers are going to Russia and I will go to Qatar tomorrow to see if we can arrange concessionary terms,” Wijesekera told reporters in Colombo.

Wijesekera had announced on Saturday that Sri Lanka was virtually out of petrol and diesel after several scheduled shipments were delayed indefinitely due to “banking” reasons.

Fuel reserves were sufficient to meet less than two days’ demand and it was being reserved for essential services, Wijesekera said while apologising for the situation.

The state-run Ceylon Petroleum Corporation on Sunday hiked the price for diesel by 15 percent to 460 rupees ($1.27) a litre and petrol by 22 percent to 550 rupees.

Since the beginning of the year, diesel prices have gone up nearly four-fold and gasoline has almost tripled.

Wijesekera said there would be an indefinite delay in getting new shipments of oil and urged motorists not to queue up until he introduces a token system to a limited number of vehicles daily.

A delegation from the US Treasury and the State Department meanwhile arrived to “explore the most effective ways for the US to support Sri Lankans in need”, the US embassy in Colombo said.